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China’s Evergrande Collapse Stokes Fear In Global Equity Market
Posted 21,September

By Chaveendra Dunuwille

In International News

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The collapse of real estate giant and poster child of china’s overheated property market China Evergrande Group (EGRNF) sent shockwaves in the global equity market, and Bitcoin prices slid as a result. 

Bitcoin, which was considered a haven from the global economic turmoil, dropped by 10% from its previously recorded $43,651.48 to $42,500. The Dow Jones Industrial Average lost 500 points, the most significant drop since July. At the same time, the London FISE 100 fellow below 7000 points for the first time since July. The Stoxx Europe 600 Index and Hong Kong’s Hang Seng Index fell by 2.1% and 4%. 

Evergrande was $300 billion in debt, making it the world’s most indebted company. The value also accounts for 6% of China’s property sector debt. $89 billion of the debt was from loans and bonds, while $120 million was from interest for two bonds. 

The company is one of China’s largest companies and has committed to developing electric cars, healthcare, consumer products, and entertainment industries. The company employs over 200,000 individuals directly, and according to the website, the company supports a further 3.8 million jobs. 

The company’s default was considered the “Lehman moment,” and many were concerned that the collapse might trigger a chain of events ultimately leading to an economic collapse similar to the financial crisis of 2008. However, analysts have pointed out that it is doubtful that the descent would cascade into the broader global economy.